It’s no longer a question of if college athletes will sign endorsement deals. It’s the when and how that lawmakers, athletes, ADs, NCAA officials and other interested parties can’t settle on.
Two members of Congress have teamed up to introduce a federal name, image and likeness bill that they hope will thread the needle.
Last Thursday, Congressman Anthony Gonzalez (R-Ohio) and Congressman Emanuel Cleaver (D-Missouri) introduced House Resolution 8382—”The Student Athlete Level Playing Field Act.”
The Act is neither the first NIL bill nor the first bipartisan attempt to address NIL. In June, Senator Marco Rubio (R-Florida) introduced the Fairness in College Athletics Act. Last year Congressman Mark Walker (R-North Carolina) joined a group of Democratic and Republican colleagues in offering The Student Athlete Equity Act. Other members of Congress eye their own proposals. Senator Cory Booker (D-New Jersey) and colleagues are crafting a “College Athletes Bill of Rights”. Meanwhile, California, Colorado, New Jersey and Florida have already enacted NIL statutes. By the end of October, the NCAA is expected to present a detailed set of NIL rules that would be voted on in January.
Despite entering a crowded market of ideas, the Playing Field Act could attract broad appeal. Like other NIL initiatives, the Act would guarantee college athletes the right to negotiate endorsement deals with sneaker, apparel, merchandise, video game, summer camp and other businesses. It would also empower those athletes to hire agents.
Other features of the Act try to sidestep more divisive topics. Here’s a legal scouting report.
State Law Preemption
In adopting a federal approach, the Act would preempt states from enforcing their own NIL laws.
A federal approach would appeal to the NCAA since it would ensure that all member schools and conferences follow the same rules. If, instead, athletes at California and Florida colleges could sign endorsement deals but those at Alabama or Texas colleges couldn’t, the former would enjoy a distinct recruiting advantage. The prospect of state law differences could lead to federal litigation. The NCAA could argue that state NIL statutes violate interstate commerce on grounds they unduly impact national NCAA rules and other states’ economies.
A federal approach would disappoint state lawmakers who regard the Act as inferior to their own law. While state NIL laws largely resemble the Act, there are distinctions. For instance, the Act envisions oversight from the Federal Trade Commission whereas state NIL laws entrust their own agencies. Keep in mind, a federal law preempting state autonomy can lead to its own legal controversy: states can challenge preemption in court.
Avoidance of Tax and Antitrust Issues
The Act tries to elude the thorny topic of how NIL rights might impact tax and antitrust laws by explicitly expressing that “nothing in this Act . . . shall affect” those laws.
College athletes signing endorsement deals could prompt the Internal Revenue Service to revisit the tax treatment of athletic scholarships, which it has regarded like academic scholarships: So long as they there are tethered to collegiate studies, they are generally excluded from tax calculations. Given that third parties (such as sneaker companies) would pay college athletes for their NIL, scholarships are arguably not connected. Still, the Act takes the topic off the table.
Similarly, the Act casts aside foreseeable antitrust complications by explicitly stating that it does not provide an antitrust cause of action. This is significant because any shared attempt by competing businesses (such as rival colleges) to constrain a market (such as athletes signing endorsement deals) could spark antitrust litigation. To be clear, the Act does not foreclose antitrust litigation—it only refrains from adding potential antitrust ammunition for players’ attorneys.
Avoidance of Employee and Unionization Issues
“Nothing” in the Act will “affect the employment status” of a college student. The obvious intent of such language is to shy away from strengthening possible legal arguments that college athletes are employees. If they are employees, they might then unionize and demand collective bargaining.
In reality, the Act can’t preclude employment recognition, which is a multifaceted issue. Athletes at private colleges are governed by the National Labor Relations Act. In 2015, the National Labor Relations Board rebuffed an employment petition brought by Northwestern University football players. Meanwhile, possible employment and unionization of athletes at public universities depends on state law; in some states, public university employees can’t unionize.
Avoidance of Title IX
Title IX prevents colleges from favoring male athletes. Athletes signing endorsement deals with third parties arguably wouldn’t trigger a Title IX issue since the school is not involved. However, if the school provides advice to athletes on endorsement matters, Title IX could reenter the calculus. The Act seems mindful of that possibility and makes clear that “nothing” in it “affects” Title IX rights.
Restrictions on Athletes’ Endorsements
While the Act generally permits college athletes to sign endorsement deals, it authorizes the NCAA and member schools to impose what might be regarded as common-sense prohibitions. They can bar endorsement deals with tobacco companies, vaping device and e-cigarette companies, alcohol companies, marijuana vendors, adult entertainment venues, casinos and gambling operators. The NCAA and conferences already ban sponsorships with many of these industries.
The Act further empowers member schools to prohibit an athlete “from wearing any item of clothing or gear with the insignia of any entity during any athletic competition or university-sponsored event.” This means if an athlete signs a deal with Nike, he or she can’t “promote” Nike during games. This presumably means they can’t wear a signature sneaker or use social media during games to push Nike.
The absence of one other restriction might induce opposition from schools: the Act doesn’t block college athletes from signing with a company that competes with a school sponsor. State NIL laws contain this feature. Another foreseeable concern related to athlete endorsements is a sponsor dropping the school and signing the athlete instead.
Empowerment of the FTC
The Act anoints the FTC as an instrumental figure in NIL. The agency would enforce the Act—including by bringing unfair and deceptive practices cases.
As detailed on Sportico, empowering the FTC has sparked questions. The agency has passively enforced the Sports Agent Responsibility and Trust Act, which makes it unlawful for an agent to dupe a college athlete into signing an agency contract. It has not prioritized enforcement of sports-related matters and lacks obvious expertise in such matters.
Creation of a Commission
Lastly, the Act calls for the creation of a 13-member “Covered Athletic Organization Commission.” It would recommend legal changes, regulate agents and supply a dispute resolution process, which would resolve disagreements between an athlete and their school. For instance, they might disagree about the fair market value of an endorsement deal—if the value “seems” too high and would be paid by a booster, it could be seen more as “pay-for-play” than NIL.
Commission members would include coaches, athletic directors, college athletes, NCAA officials and sports marketing professionals. The Senate Majority Leader, Senate Minority Leader, Speaker of the House and House Minority Leader would each appoint three members. Those four would also appoint a 13th member who would serve as Chair; if they can’t agree, the Speaker would make that appointment.
The proposed commission is intriguing, especially since it could adapt and modify rules as the emerging NIL market develops. However, the commission’s design could face opposition from state government leaders who demand state control and possibly also the White House, which would be shut out of the appointment process.
